Continuing advances in network and computer technologies have led to an explosion in online commerce. For example, consumers may purchase items of interest from online-based retail entities (e.g., Amazon.com), online counterparts for brick-and-mortar retail entities, and/or, in some cases, directly from manufacturers, wholesalers, or vendors of any sort by navigating to a web site or other online resource, selecting product(s), and providing payment and shipping information.
Although online commerce has led to substantial benefits and efficiencies for numerous parties, it has also had unintended adverse consequences, especially in the case of retail entities who traditionally played a role beyond a mere distribution point for goods. For instance, specialty shops were and are relied upon by customers and potential customers as a source for relatively in-depth knowledge of available products and trends, recommendations for purchasing, using and maintaining products of interest, and as a focal point for a community of customers and enthusiasts. Examples of specialty shops include, but are not limited to, retail entities focused on snowboarding, surfing, and mountain biking equipment and accessories. These shops are often, but not always, relatively smaller businesses with a single location or only a few locations.
Although customers and potential customers may wish to rely on the services and knowledge of a specialty shop, not all potential customers actually support the shop economically. As an example, a potential customer may view products at a brick and mortar specialty shop and rely on the services and recommendations of a knowledgeable specialist at the shop but then use the recommendations to purchase product(s) from an online retail entity offering the same product at a lower price. The brick and mortar shop puts in the work to facilitate the sale, but sees no direct benefit. The customer may return to the shop for accessories in some cases and generate revenue, but just as likely may never return or may return for assistance in configuring the product purchased elsewhere.
Against this backdrop, retail entities must contend with the traditional problems of retailing. For instance, a retail entity may be required to estimate demand and commit to purchase of inventory well in advance of when the inventory is to be sold. The retail entity may end up with too much of a first product and too little of a second product to meet local demand. At the same time, a different retail entity may have too much of the second product and too much of the first product. Although inventory management is an important aspect of retail businesses regardless of size, overstocking or understocking may significantly affect the fortunes of a small business such as a specialty shop. Such retail entities may be highly motivated to move their excess inventories by heavily discounting the product(s) for which they have too much inventory, which ultimately leads to reduced profits or increased losses for all.
Manufacturers and other vendors, especially those of specialty goods, have attempted to reduce the economic impact of online sales by attempting to limit or prohibit online sales and enforce pricing schedules. However, these efforts have not been fully successful. Additionally, customers, especially those of specialty goods, may not always choose the best product on their own. When the ill-chosen product leads to an unfavorable experience, the customers blame the manufacturer or other vendor. Finally, deep discounts at the retail level can pressure manufacturers/vendors to lower wholesale prices, ultimately reducing manufacturer profitability; in practice, manufacturers/vendors often push the loss to retailers.